Rental property can give your investment portfolio a significant boost. Not only will it diversify your assets, it will give your portfolio a potential increase in returns. While more prone to risk than other investment, rental properties can be one of the best investments possible.
But rental property can be risky. It takes a large commitment of both resources and energy to successfully own and manage a rental property. It’s also true that rental properties in some areas are more likely to deliver a return than properties in other locations.
According to the experts, these are the best places to own a rental…
If You Live in One of these Cities, Consider Purchasing Rental Property as an Investment!
To compile this article, we used information from Real Wealth Network, an educational company that conducts research in the real estate industry and other sectors of the market, providing useful resources to real estate professionals. To complete their list, they looked at three important factors that impact rental property:
- Job growth: This will ensure the city has an ample supply of income-earning workers who are moving to the city.
- Population growth: When the population of the city is expanding, it generally means the city will have a higher demand for housing.
- Affordability: If people can’t afford to live in the city, they will move elsewhere, creating less demand for your property. Affordability, therefore, is important to investors.
As stated by Kathy Fettke of Real Weath Network, “when you find a market that has all three of these factors, you’ll probably be able to find good investment opportunities.”
So what cities are the best? Let’s find out…
1. Orlando, Florida
This city has a lot of factors contributing to its status as the top city for investors, including low unemployment, which sits at only 2.9%. The growth rate for employment is also high, especially compared to the national growth. In fact, jobs in Orlando are growing 134% faster than the national average. Orlando also benefits from investor-friendly property taxes and low insurance rates, in addition to Florida’s zero income tax.
2. Tampa, Florida
Tampa benefits from a strong economy that, according to Real Wealth Network, is worth nearly $130 billion, and it’s one of the fastest-growing areas in not just the state but the entire nation. In just a year, Tampa brought in more than 34,000 new jobs, adding a vibrant workforce to the local economy. While many in this workforce are purchasing homes, there is a large section that are choosing to rent, creating new opportunities for investors.
3. Jacksonville, Florida
What is it about Florida as a whole that makes it so attractive to real estate investors? Whatever the cause, Jacksonville is the third best place to purchase rental properties, driven largely by the presence of large employers, including four Fortune 500 companies. It has a business-friendly environment, low unemployment, and a growing population that is always on the lookout for quality housing.
4. Huntsville, Alabama
We finally move out of Florida, although we stay in the southeast region of the country. Huntsville, Alabama is one of the most affordable locations for housing, but it’s the extremely low unemployment, as low as 2.3%, that makes the city attractive to investors. If you own property in this city, you are able to choose from a pool of rental applicants who are more likely to have gainful employment.
5. Dallas, Texas
Historically, Dallas is one of the most important cities in the country and arguably the most important city for the regional economy. While it came to prominence on the oil and cotton industries, modern tech companies are now defining Dallas, relocating to Texas and taking advantage of the business-friendly atmosphere. Homes in Dallas are affordable, the population is growing, and the unemployment remains low, creating a wonderful opportunity for investors.
6. Houston, Texas
Moving to the southern end of the Lone Star State, Houston is experiencing rapid growth and development. Although unemployment is actually higher than some of the cities we’ve discussed, the single-year rate of growth is 76% faster than the national average. Rent is also high (but not extreme) for this area, giving investors the chance to realize a strong income.
7. Cleveland, Ohio
We finally travel to a city in the northern regions. Cleveland has higher unemployment than many of the top cities for rental-property investors, but the cost of homes in the area makes it highly attractive. Real Wealth Networks says that the average home price in Cleveland is $138,000, which means investors can enter the market with a smaller upfront cost or smaller mortgage loan.
8. Cincinnati, Ohio
Now we travel from Lake Erie to the Ohio River. Situated on Ohio’s southeastern edge, Cincinnati brings jobs growth and affordable housing to become one of the best places to purchase an investment property. Nothing stands out as extreme, but all the right factors are in place, including affordable home prices, good monthly rents, and steady job growth.
9. Chicago, Illinois
The third-largest metro area in the nation is also one of the best place for purchasing an investment property. Surprisingly, the cost of housing in the Windy City is 5% below the national average, while average rent is 7% above. So investors may be able to get a great deal on a house and realize a strong return from their purchase. With a population of 9.5 million, there is also a large pool of potential buyers, which can compensate for Chicago’s below-average job growth.
10. Indianapolis, Indiana
The job growth in Indianapolis is 45% slower than the national average, but that’s okay, as the city already enjoys a solid 3.1% unemployment. Housing is affordable, and buyers can get rent checks that are on average 5% higher than the national average. It’s a fast-growing hub for tech and science industries, bringing excellent pay to a wide variety of potential renters.
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Whether you are looking for a rental property in California or another state, let us help. Contact our staff today to see if we can assist with your investment purchase. We even provide access to no-income investment loans, which can help you make a purchase that will enhance a vibrant portfolio.
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I was referred to Chad by my Realtor for a purchase of a new house. The experience with Chad and the team (I mainly worked with Juliann) was nothing short of outstanding. From start to finish there were always quick to respond and when needed, notify me of any new documentation that was required. There were very helpful explaining to me the pros and cons of different financing options as well as some other loan related issues, such as termite clearance outside the purchase contact and septic tank certification process. Overall, very knowledgeable and processional team. Loan preapproval was done in a single day and loan documents were ready for signing in 21 days, which was 9 days ahead of schedule. That never happened to me before.